LyondellBasell Industries N.V. (LYB) Bundle
Understanding LyondellBasell Industries N.V. (LYB) Revenue Streams
Understanding LyondellBasell Industries N.V.’s Revenue Streams
The company generates revenue through various segments, including Olefins and Polyolefins, Intermediates and Derivatives, Advanced Polymer Solutions, Refining, and Technology. The following table outlines the sales and other operating revenues for the nine months ended September 30, 2024, compared to 2023:
| Segment | 2024 Revenue (Millions) | 2023 Revenue (Millions) |
|---|---|---|
| Olefins and Co-products | $2,950 | $2,658 |
| Polyethylene | $5,788 | $5,750 |
| Polypropylene | $4,782 | $4,326 |
| Propylene Oxide and Derivatives | $1,803 | $1,737 |
| Oxyfuels and Related Products | $3,914 | $4,269 |
| Intermediate Chemicals | $2,120 | $2,187 |
| Compounding and Solutions | $2,795 | $2,848 |
| Refined Products | $6,120 | $6,860 |
| Other | $533 | $543 |
| Total | $30,805 | $31,178 |
In the first nine months of 2024, total revenue decreased by 1% compared to the same period in 2023, primarily driven by lower sales volumes in various segments.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate shows a decline from 2023 to 2024. The company reported a decrease of $373 million or 1% in total revenue for the first nine months of 2024 compared to 2023. The breakdown of revenue changes is as follows:
- Olefins and Co-products: Increased by $292 million
- Polyethylene: Increased by $38 million
- Polypropylene: Increased by $456 million
- Oxyfuels and Related Products: Decreased by $355 million
- Refined Products: Decreased by $740 million
Contribution of Different Business Segments to Overall Revenue
The contribution of various business segments to total revenue for the first nine months of 2024 is as follows:
| Segment | Revenue (Millions) | Percentage of Total Revenue |
|---|---|---|
| Olefins and Co-products | $2,950 | 9.6% |
| Polyethylene | $5,788 | 18.8% |
| Polypropylene | $4,782 | 15.5% |
| Propylene Oxide and Derivatives | $1,803 | 5.9% |
| Oxyfuels and Related Products | $3,914 | 12.7% |
| Intermediate Chemicals | $2,120 | 6.9% |
| Compounding and Solutions | $2,795 | 9.1% |
| Refined Products | $6,120 | 19.9% |
| Other | $533 | 1.7% |
| Total | $30,805 | 100% |
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams include:
- The Oxyfuels and Related Products segment saw a decline in revenue by $355 million due to lower gasoline crack spreads.
- Refined Products revenue decreased by $740 million attributed to lower average sales prices amid declining crude oil prices.
- Polypropylene revenue experienced growth due to increased average sales prices and improved demand.
The overall revenue performance reflects a challenging market environment, with fluctuations in demand and pricing impacting various segments differently.
A Deep Dive into LyondellBasell Industries N.V. (LYB) Profitability
A Deep Dive into LyondellBasell Industries N.V.'s Profitability
Gross Profit Margin:
For the third quarter of 2024, the gross profit margin was 21.0%, down from 23.5% in the second quarter of 2024. The gross profit for Q3 2024 was reported at $1,242 million, compared to $1,188 million in Q2 2024.
Operating Profit Margin:
The operating profit margin for Q3 2024 was 7.8%, a decrease from 9.2% in Q2 2024. The operating income for Q3 2024 was $802 million, compared to $970 million in Q2 2024.
Net Profit Margin:
The net profit margin for Q3 2024 stood at 5.6%, down from 8.7% in Q2 2024. The net income for Q3 2024 was reported at $577 million, a significant drop from $924 million in Q2 2024.
Trends in Profitability Over Time
Year-to-date profitability metrics for the first nine months of 2024 show:
- Gross profit margin: 23.6%
- Operating profit margin: 8.0%
- Net profit margin: 6.4%
In comparison, for the first nine months of 2023:
- Gross profit margin: 24.1%
- Operating profit margin: 8.9%
- Net profit margin: 6.2%
The overall trend indicates a slight decrease in gross and operating margins, while net margins have shown a stable performance year-over-year.
Comparison of Profitability Ratios with Industry Averages
As of Q3 2024, the industry average profitability ratios are:
- Gross profit margin: 25.0%
- Operating profit margin: 10.0%
- Net profit margin: 7.5%
When compared to these averages, the company is performing below the industry standards, particularly in operating and gross margins.
Analysis of Operational Efficiency
The operational efficiency can be observed through the following metrics:
- Cost of sales for Q3 2024 was $9,080 million, a decrease from $9,148 million in Q2 2024.
- SG&A expenses for Q3 2024 were $404 million, consistent with $407 million in Q2 2024.
- Capital expenditures for the first nine months of 2024 were $1,335 million, compared to $1,047 million in the same period of 2023.
Gross Margin Trends:
| Period | Gross Profit Margin | Operating Profit Margin | Net Profit Margin |
|---|---|---|---|
| Q3 2024 | 21.0% | 7.8% | 5.6% |
| Q2 2024 | 23.5% | 9.2% | 8.7% |
| Q3 2023 | 24.1% | 8.9% | 6.2% |
Debt vs. Equity: How LyondellBasell Industries N.V. (LYB) Finances Its Growth
Debt vs. Equity: How LyondellBasell Industries N.V. Finances Its Growth
Overview of the company's debt levels
As of September 30, 2024, the company reported total debt, including current maturities, of $11,260 million. This comprises long-term debt of $11,132 million and current maturities of $128 million. The breakdown of long-term debt includes:
| Debt Instrument | Amount (Millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| Guaranteed Notes due 2030 | 500 | 2.25% | 2030 |
| Guaranteed Notes due 2033 | 500 | 5.625% | 2033 |
| Guaranteed Notes due 2034 | 750 | 5.5% | 2034 |
| Guaranteed Notes due 2040 | 750 | 3.375% | 2040 |
| Guaranteed Notes due 2049 | 1,000 | 4.2% | 2049 |
| Guaranteed Notes due 2050 | 1,000 | 4.2% | 2050 |
| Guaranteed Notes due 2051 | 1,000 | 3.625% | 2051 |
| Guaranteed Notes due 2060 | 500 | 3.8% | 2060 |
| Other | 19 | N/A | N/A |
| Total Long-Term Debt | 11,132 | N/A | N/A |
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for the company as of September 30, 2024, is approximately 1.48 based on total equity of $7,570 million. This ratio is higher than the industry average of around 1.0, indicating a more aggressive capital structure funded by debt compared to peers in the chemical manufacturing industry.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In February 2024, the company issued $750 million of 5.5% guaranteed notes due in 2034. In March 2024, it repaid $775 million of outstanding principal on 5.75% senior notes due 2024. Additionally, in May 2023, it issued $500 million of 5.625% guaranteed notes due in 2033. The company maintains a credit rating of Baa2 from Moody's and BBB from S&P, indicating a stable outlook for its debt obligations.
How the Company Balances Between Debt Financing and Equity Funding
The company employs a balanced approach to funding its operations, utilizing both debt and equity. It has a strong cash position, with $2,621 million in cash and cash equivalents as of September 30, 2024, which supports its ability to service existing debt. The company also returned $1,400 million to shareholders through dividends and share repurchases in the first nine months of 2024, reflecting its commitment to shareholder returns while maintaining sufficient liquidity for operational needs.
Assessing LyondellBasell Industries N.V. (LYB) Liquidity
Assessing LyondellBasell Industries N.V. Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets (Millions) | Current Liabilities (Millions) | Current Ratio |
|---|---|---|
| $7,045 | $4,157 | 1.69 |
Quick Ratio: The quick ratio is derived from the formula:
| Quick Assets (Millions) | Current Liabilities (Millions) | Quick Ratio |
|---|---|---|
| $4,424 | $4,157 | 1.06 |
Analysis of Working Capital Trends
Working capital as of September 30, 2024, shows a significant increase from the previous year:
| Date | Current Assets (Millions) | Current Liabilities (Millions) | Working Capital (Millions) |
|---|---|---|---|
| September 30, 2024 | $7,045 | $4,157 | $2,888 |
| December 31, 2023 | $6,829 | $3,986 | $2,843 |
Cash Flow Statements Overview
Cash flow from operating, investing, and financing activities for the nine months ended September 30, 2024, is summarized as follows:
| Cash Flow Activity (Millions) | 2024 | 2023 |
|---|---|---|
| Operating Activities | $1,904 | $3,438 |
| Investing Activities | ($1,306) | ($1,171) |
| Financing Activities | ($1,377) | ($1,545) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company holds:
- Cash and Cash Equivalents: $2,621 million
- Total Debt: $11,260 million
- Unused Credit Facilities: $4,650 million
The total cash flow provided by operating activities was $1,904 million, which reflects a decline compared to the previous year, primarily driven by increased working capital needs, specifically in accounts receivable and inventories.
Is LyondellBasell Industries N.V. (LYB) Overvalued or Undervalued?
Valuation Analysis
As of 2024, the valuation analysis of LyondellBasell Industries N.V. provides critical insights into whether the company is overvalued or undervalued based on various financial ratios and metrics.
Price-to-Earnings (P/E) Ratio
The price-to-earnings (P/E) ratio is a vital indicator of how the market values a company's earnings. For LyondellBasell, the current P/E ratio is 15.5, compared to the industry average of 17.0. This suggests that the company may be undervalued relative to its peers.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio for LyondellBasell stands at 2.1, while the industry average is 2.5. This lower P/B ratio indicates that the company is trading at a discount relative to its book value, further supporting the notion of undervaluation.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is currently 8.9, which is below the industry average of 10.3. This metric suggests that the company may be undervalued based on its cash earnings potential.
Stock Price Trends
Over the last 12 months, LyondellBasell's stock price has experienced fluctuations, starting at approximately $100 per share and reaching a high of $118 before settling at around $105 as of October 2024. The stock has shown resilience amidst market volatility.
Dividend Yield and Payout Ratios
LyondellBasell offers a dividend yield of 3.5%, with a payout ratio of 40%. This indicates a healthy balance between returning value to shareholders and retaining earnings for growth.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a general sentiment of hold for LyondellBasell, with 60% of analysts recommending a hold position, 30% suggesting buy, and 10% recommending sell. This mixed sentiment reflects cautious optimism regarding the company’s future performance.
| Metric | LyondellBasell | Industry Average |
|---|---|---|
| P/E Ratio | 15.5 | 17.0 |
| P/B Ratio | 2.1 | 2.5 |
| EV/EBITDA | 8.9 | 10.3 |
| Stock Price (Oct 2024) | $105 | N/A |
| Dividend Yield | 3.5% | N/A |
| Payout Ratio | 40% | N/A |
| Analyst Consensus | Hold | N/A |
Key Risks Facing LyondellBasell Industries N.V. (LYB)
Key Risks Facing LyondellBasell Industries N.V.
The financial health of LyondellBasell Industries N.V. (LYB) is influenced by various internal and external risk factors that could impact its operations and profitability. Understanding these risks is crucial for investors looking to assess the company’s future performance.
Industry Competition
The chemical manufacturing sector is highly competitive, with numerous players vying for market share. The presence of both large multinational corporations and smaller regional firms intensifies competition. As of September 30, 2024, the company's revenues were reported at $10,322 million for the third quarter, a slight decrease compared to $10,558 million in the second quarter of 2024.
Regulatory Changes
Changes in environmental regulations can significantly affect operational costs. Compliance with stringent regulations may require substantial capital investments. The company has recognized potential liabilities related to environmental remediation amounting to $143 million as of September 30, 2024.
Market Conditions
Fluctuations in market demand directly impact sales. For instance, the refining segment experienced a decline in EBITDA, reporting a loss of $60 million in the third quarter of 2024. This reflects the sensitivity of the company’s earnings to market dynamics and consumer demand trends.
Operational Risks
Operational risks such as unplanned downtime can adversely impact production. The company has faced challenges with lower cracker operating rates, resulting in reduced sales volumes. In the first nine months of 2024, revenues decreased by $373 million, or 1%, compared to the previous year.
Financial Risks
Financial risks include exposure to commodity price fluctuations. The company’s revenues are influenced by the prices of raw materials, which are linked to crude oil prices. For example, the average sales prices for many products decreased, contributing to a 2% decline in revenues for the first nine months of 2024.
Strategic Risks
The strategic decision to divest certain business segments can lead to short-term revenue impacts. The company sold its EO&D business for $700 million in the second quarter of 2024, which resulted in a significant gain but may affect future earnings.
Mitigation Strategies
The company employs various strategies to mitigate risks. This includes diversifying its product offerings and geographical reach to reduce dependence on any single market. Additionally, LyondellBasell has committed to a balanced capital allocation strategy, targeting shareholder returns of 70% of free cash flow.
| Risk Type | Description | Impact |
|---|---|---|
| Industry Competition | Numerous competitors in the market | Revenue fluctuations |
| Regulatory Changes | Stricter environmental regulations | Increased operational costs |
| Market Conditions | Fluctuating demand | Sales revenue decline |
| Operational Risks | Unplanned downtimes | Reduced production capacity |
| Financial Risks | Commodity price exposure | Earnings volatility |
| Strategic Risks | Divestiture of business segments | Short-term revenue impact |
Future Growth Prospects for LyondellBasell Industries N.V. (LYB)
Future Growth Prospects for LyondellBasell Industries N.V.
Analysis of Key Growth Drivers
The primary growth drivers for the company include product innovations, market expansions, and strategic acquisitions. In May 2024, the company sold its Ethylene Oxide & Derivatives (EO&D) business for $700 million, a move aimed at refocusing its portfolio. This sale resulted in a pre-tax gain of $293 million.
In terms of product innovations, the company has increased its production capacity for recycled compounds, which has contributed to revenue growth despite lower average sales prices. For the first nine months of 2024, revenue from recycled compounds grew by 1%.
Future Revenue Growth Projections and Earnings Estimates
The revenue for the first nine months of 2024 totaled $30.805 billion, a decrease from $31.178 billion in the same period of 2023. However, the company’s EBITDA increased by 154% to $3.865 billion in the first nine months of 2024 compared to $3.870 billion in 2023.
Analysts project a modest recovery in revenues driven by improved margins in the O&P-Americas segment, with expectations of 2% growth in sales for the third quarter of 2024.
Strategic Initiatives or Partnerships Driving Future Growth
The company has entered into a joint venture with the National Petrochemical Industrial Company (NATPET), acquiring a 35% stake for approximately $500 million. This partnership is expected to enhance its competitive positioning in the petrochemical market.
Additionally, the company is committed to sustainable practices, focusing on circular economy initiatives that are anticipated to drive growth in demand for its recycled product offerings.
Competitive Advantages Positioning the Company for Growth
The company benefits from significant operational flexibility, allowing it to optimize raw material usage based on market prices. As of September 30, 2024, approximately 75% of raw materials used in its North American crackers were ethane.
With a strong balance sheet, the company had cash and cash equivalents of $2.621 billion as of September 30, 2024, which supports its growth initiatives and strategic investments.
| Key Financial Metrics | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Total Revenue | $30.805 billion | $31.178 billion |
| EBITDA | $3.865 billion | $3.870 billion |
| Cash and Cash Equivalents | $2.621 billion | $2.844 billion |
| Capital Expenditures | $1.335 billion | $1.047 billion |
| Debt (Total) | $11.260 billion | Not Applicable |
Through strategic initiatives and a focus on innovation, the company is positioned to leverage its competitive advantages to capitalize on growth opportunities in the coming years.
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Article updated on 8 Nov 2024
Resources:
- LyondellBasell Industries N.V. (LYB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of LyondellBasell Industries N.V. (LYB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View LyondellBasell Industries N.V. (LYB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.